The I Bond Thread

[erkevin]

On a side note: I called treasury Direct this AM because I locked myself out of my account. Within seconds after pressing "2", a human answered. Yes, a real human. Got my account access reinstated in about 2 minutes. total time on the call 3m 46s.

 

[Free bird]

On a side note: I called treasury Direct this AM because I locked myself out of my account. Within seconds after pressing "2", a human answered. Yes, a real human. Got my account access reinstated in about 2 minutes. total time on the call 3m 46s.

Signs & wonders

 

[audreyh1]

Couldn’t resist the 0.9% fixed rate and bought some new IBonds this morning. I will probably redeem my 0.2% fixed rate IBonds later this year when they stop earning 6.96%.

 

[Mulligan]

Couldn’t resist the 0.9% fixed rate and bought some new IBonds this morning. I will probably redeem my 0.2% fixed rate IBonds later this year when they stop earning 6.96%.

I plan on gifting 15k to myself via GF of the .9% prior to next cycle. Hoping following cycle is better next year and do the purchase and gift. Will cull the 0% herd to help pay for them.

 

[Fermion]

About how long does it take for paper bonds to show up as converted to electronic? I mailed them in about 3 1/2 weeks ago but when I view the manifest, I don't see any changes yet and no bonds are showing up yet in my conversion account.

 

[Kayzmum]

Confused about interest rate on iBonds

On the website our iBond purchased 5/1/22 notes 3.38% interest. The iBond purchased on 10/1/22 shows 6.48% interest. I thought they would both be 4.3%, the rate that went into effect on 5/1/23.

 

[audreyh1]

Your IBonds switch to the new rate 6 months after your purchase month. So your 5/22 IBond changed to the latest rate in May and will again in Nov. Your 10/22 IBond changed to its current rate in April won’t switch to the latest rate until October.

The 4.3% rate on the current issue IBonds includes a 0.9% fixed rate. The earlier issued 2022 IBonds had lower fixed rates and won’t be the same.

According to the Treasury Direct page linked both your 2022 issued IBonds have a 0% fixed component in their rates. https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/

 

[Kayzmum]

Your IBonds switch to the new rate 6 months after your purchase month. So your 5/22 IBond changed to the latest rate in May and will again in Nov. Your 10/22 IBond changed to its current rate in April won’t switch to the latest rate until October.

The 4.3% rate on the current issue IBonds includes a 0.9% fixed rate. The earlier issued 2022 IBonds had lower fixed rates and won’t be the same.

According to the Treasury Direct page linked both your 2022 issued IBonds have a 0% fixed component in their rates. https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/

I think I see what you mean. I was thinking it stayed the same interest for the 6 months after I bought them and then changed every May 1st and October 1st, but it seems like you're saying they change every six months from the date purchased and they ignore the newest interest rate until the 6-month interval reoccurs. Is this correct?

 

[audreyh1]

Right, the rate changes every 6 months from your purchase month. So you stay at the rate you purchased for 6 months then change to the new rate (announced every May and Nov) for the next 6 months, etc.

And the actual rate you get depends on the fixed rate at time of purchase. That never changes for your IBond. Just the inflation component. The link goes into to details.

 

[Kayzmum]

Right, the rate changes every 6 months from your purchase month. So you stay at the rate you purchased for 6 months then change to the new rate (announced every May and Nov) for the next 6 months, etc.

And the actual rate you get depends on the fixed rate at time of purchase. That never changes for your IBond. Just the inflation component. The link goes into to details.

Thank you!

 

[londo]

About how long does it take for paper bonds to show up as converted to electronic? I mailed them in about 3 1/2 weeks ago but when I view the manifest, I don't see any changes yet and no bonds are showing up yet in my conversion account.

Did you get an email acknowledging receipt? I sent in paper bonds in February and the email I received said to allow up to 13 weeks. I checked at about 12 weeks and they weren't there yet. We're now at about 15 weeks and I just checked and they are in my account. So you may have another couple of months to wait.

 

[pb4uski]

I think I see what you mean. I was thinking it stayed the same interest for the 6 months after I bought them and then changed every May 1st and October 1st, but it seems like you're saying they change every six months from the date purchased and they ignore the newest interest rate until the 6-month interval reoccurs. Is this correct?

Go to eyebonds.com and pick the denomination and month/year of issue to see a table of values.

 

[madatrub]

Go to eyebonds.com and pick the denomination and month/year of issue to see a table of values.

eyebonds.info?

 

[Chuckanut]

Did you get an email acknowledging receipt? I sent in paper bonds in February and the email I received said to allow up to 13 weeks. I checked at about 12 weeks and they weren't there yet. We're now at about 15 weeks and I just checked and they are in my account. So you may have another couple of months to wait.

It took about 4 weeks for a few Ibonds I had to convert. IIRC, I never received an email saying they were received. I checked about once a week, and one day there they were in my account.

 

[PatrickA5]

About how long does it take for paper bonds to show up as converted to electronic? I mailed them in about 3 1/2 weeks ago but when I view the manifest, I don't see any changes yet and no bonds are showing up yet in my conversion account.

We sent inherited bonds in about 9 weeks ago and still waiting. Ours were a little more complicated as we're trying to have bonds that were solely in FIL's name transferred to DWs account in her name. Hopefully, we filled out the paperwork correctly. Not a quick process. DW did receive an email saying Treasury got the bonds, so we at least know they have them.

 

[Earl E Retyre]

I just logged into the Treasury Direct site to see what my iBonds are earning. It is such a difficult site to navigate. But I finally found that the iBonds I purchased 1 year ago (6/1/22) show they are earning 3.38%. I assume that is an annual rate. If so, I am thinking now is a good time to take the 3 month early withdraw penalty and move the funds since I can earn over 5% in a CD. Agree or am I missing something?

 

[Gumby]

I just logged into the Treasury Direct site to see what my iBonds are earning. It is such a difficult site to navigate. But I finally found that the iBonds I purchased 1 year ago (6/1/22) show they are earning 3.38%. I assume that is an annual rate. If so, I am thinking now is a good time to take the 3 month early withdraw penalty and move the funds since I can earn over 5% in a CD. Agree or am I missing something?

If you bought them in June 2022, they earned 9.62% for six months, then 6.48% for six months. If you redeem I-Bonds before you have held them for 5 years, there is an early redemption penalty of the last three months of interest. If you cash them now, you are wiping out three months of interest at 6.48%. If you wait until September, those three months of lost interest will be at only 3.38%. That's what I am doing - waiting until September to sell.

 

[erkevin]

If you bought them in June 2022, they earned 9.62% for six months, then 6.48% for six months. If you redeem I-Bonds before you have held them for 5 years, there is an early redemption penalty of the last three months of interest. If you cash them now, you are wiping out three months of interest at 6.48%. If you wait until September, those three months of lost interest will be at only 3.38%. That's what I am doing - waiting until September to sell.

This is the correct answer.

 

[finnski1]

If you bought them in June 2022, they earned 9.62% for six months, then 6.48% for six months. If you redeem I-Bonds before you have held them for 5 years, there is an early redemption penalty of the last three months of interest. If you cash them now, you are wiping out three months of interest at 6.48%. If you wait until September, those three months of lost interest will be at only 3.38%. That's what I am doing - waiting until September to sell.

That's what I am doing as well. Hopefully we can do better than 3.38% at that time, if not I may leave them for a little longer.

 

[Earl E Retyre]

If you bought them in June 2022, they earned 9.62% for six months, then 6.48% for six months. If you redeem I-Bonds before you have held them for 5 years, there is an early redemption penalty of the last three months of interest. If you cash them now, you are wiping out three months of interest at 6.48%. If you wait until September, those three months of lost interest will be at only 3.38%. That's what I am doing - waiting until September to sell.

Thanks, Gumby. That makes perfect sense. I just put a note on my calendar to sell in September. Thanks!

 

[11522914]

If you bought them in June 2022, they earned 9.62% for six months, then 6.48% for six months. If you redeem I-Bonds before you have held them for 5 years, there is an early redemption penalty of the last three months of interest. If you cash them now, you are wiping out three months of interest at 6.48%. If you wait until September, those three months of lost interest will be at only 3.38%. That's what I am doing - waiting until September to sell.

This makes sense but there is something I need to understand. I've never sold an I bond before so don't have any experience with that.

I bought an I bond 113021. The I bond did not start accruing any interest until 030122 which to my understanding means they withheld 3 months of interest. If I sell this I bond today my understanding is a penalty of the last 3 months interest.

What happens to the 3 months of interest that was never paid in the beginning? Do I get that back when I redeem it? Wouldn't I be losing 6 month of interest if I don't get that back?

I'm usually pretty good at understanding financial topics but for some reason I can't get this one. I'm sure I'm just not figuring something out

 

[Gumby]

This makes sense but there is something I need to understand. I've never sold an I bond before so don't have any experience with that.

I bought an I bond 113021. The I bond did not start accruing any interest until 030122 which to my understanding means they withheld 3 months of interest. If I sell this I bond today my understanding is a penalty of the last 3 months interest.

What happens to the 3 months of interest that was never paid in the beginning? Do I get that back when I redeem it? Wouldn't I be losing 6 month of interest if I don't get that back?

I'm usually pretty good at understanding financial topics but for some reason I can't get this one. I'm sure I'm just not figuring something out

You misunderstand what the Treasury Direct website is telling you. All I-Bonds earn interest from the first day of the month that they are purchased. I bonds have an early redemption penalty of the last three months interest. When the Treasury Direct website tells you the value of your current holdings, it accounts for the 3 month penalty and tells you what you would get if you cash out today.

So, for the first three months you hold them, the Treasury Direct site does not show any interest accruing, because it would be forfeited if you sold. Starting at the conclusion of the fourth month, it will show the first month's worth of interest and at the end of the 5th month will show the first and second months' interest and so on and so forth. It is always the interest accrued to the point three months in the past because the final three months are forfeit if you redeem. After you hit the 5 years minimum holding period, that penalty goes away.

 

[BlueberryPie]

The Treasury Direct site shows the redemption value, so the 3 months interest penalty is already discounted in what you see.
I've never held one that long but I believe as soon as you get to the 5 year limit when the penality no longer applies, you will see a jump in value corresponding to the last 3 months of interest that are no longer withheld.

 

[11522914]

You misunderstand what the Treasury Direct website is telling you. All I-Bonds earn interest from the first day of the month that they are purchased. I bonds have an early redemption penalty of the last three months interest. When the Treasury Direct website tells you the value of your current holdings, it accounts for the 3 month penalty and tells you what you would get if you cash out today.

So, for the first three months you hold them, the Treasury Direct site does not show any interest accruing, because it would be forfeited if you sold. Starting at the conclusion of the fourth month, it will show the first month's worth of interest and at the end of the 5th month will show the first and second months' interest and so on and so forth. It is always the interest accrued to the point three months in the past because the final three months are forfeit if you redeem. After you hit the 5 years minimum holding period, that penalty goes away.

This makes sense to me. Thank you.

 

[11522914]

The Treasury Direct site shows the redemption value, so the 3 months interest penalty is already discounted in what you see.
I've never held one that long but I believe as soon as you get to the 5 year limit when the penality no longer applies, you will see a jump in value corresponding to the last 3 months of interest that are no longer withheld.

Makes sense. Thanks